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Are you serious about business cycle theory? In 1937, back when economists thought big and coherent thoughts about the boom-bust cycle, long before mainstream economists began to doubt the existence of theoretical universals, Professor Gottfried Haberler, an exponent of the Austrian theory, wrote a full and wonderful treatise on the topic. He sought to answer the question of how a developed and thriving economy could find itself plunged into economic crisis.

In the course of his narrative, he gives a full and robust presentation and defense of the Austrian perspective, comparing and contrasting it with the emerging Keynesian one. The treatment stands on its own merits today, but what is especially striking is how little has changed in the meantime. Yes, the mathematics are more sophisticated and the theories are ever more obscure and seemingly complicated today, but the theoretical debate is essentially the same.

Is the business cycle intrinsic to the market system or is it something wrought by various forms of government intervention? Haberler gives a sound and thorough presentation of the Mises-Hayek theory that business cycles are a result of artificial injections of credit via below-market interest rates, mostly granted by a government-protected banking money.

It is especially exciting that Haberler wrote this book at a time when theory was in flux. The stakes were very high. Though he avoids polemics in favor of clear exposition, his prose conveys that sense of urgency. Here again today that sense of urgency is back and this treatise emerges again with a crucial role of clarifying both issues and answers.